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Intentional set-off

An arrangement between two enterprises in which the cost-benefit of a transaction between the two is valued for purposes of offsetting the net gain or losses derived from the transaction, thus limiting the tax liabilities. For example, if enterprise A purchases a product from enterprise B, it could receive reciprocal value if enterprise B purchases the raw materials to produce the product from enterprise A. The exchange generates an offset to any benefit gains which minimises the tax consequence.

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  • Part of Speech: noun
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  • Industry/Domain: Law
  • Category: Contracts
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